What Does a Means Test Entail?
The initial requirement is to complete a Means Test. You will be able to determine if you have the """"means"""" to pay off your debt by analyzing a number of different factors. In order to satisfy the Means Test, your income must be less than the median income for families of your size and location. If your income is below the median, you are automatically eligible for Chapter 7 bankruptcy. If you earn more, we will now examine your disposable income. This calculation takes into account your fixed costs, such as your mortgage or rent, utilities, insurance, and other essentials. This quantity is deducted from your income to determine your discretionary income. If you have sufficient disposable income to continue making debt payments, you fail the Means Test. However, if your disposable income is low, Chapter 7 bankruptcy will be available to you.
What Effect Does a Means Test Have on You?
What impact does passing or failing the Means Test have on you? The Means Test determines eligibility for Chapter 7 bankruptcy. Chapter 7 bankruptcy discharges or eliminates the majority of your debt, as you lack the means to pay it. For many, this is a chance for a fresh start after years of struggling to make payments on debts that never seem to disappear. If you fail the Means Test, Chapter 13 bankruptcy may still provide you with financial relief. Also, passing the Means Test does not guarantee that Chapter 7 is the greatest option for you. When you register for Chapter 13, you are given a 3 to 5 year payment plan to eliminate your debt. This allows you to keep your property and live within your financial means. During the years of your Chapter 13 bankruptcy, your financial and personal circumstances may improve, allowing you to repay your debts as planned.
This is just a brief overview of the Means Test. If you need assistance filing for bankruptcy, you should consult with a bankruptcy attorney. There are numerous stages that must be completed accurately, and this is where your attorney will be of the most assistance. They will know precisely what to do and when. If you attempt to represent yourself and make an error, your case could be dismissed, which is the last thing you want.""
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